PACIFICHEALTH LABORATORIES, INC.
PROMOTIONAL SHARES LOCK-IN AGREEMENT
I. This Promotional Shares Lock-In Agreement ("Agreement"), which was entered
into on the 16th of December 1997, by and between PacificHealth
Laboratories, Inc. ("Issuer"), whose principal place of business is located
in Woodbridge, New Jersey, and _________________________ ("Security Holder")
witnessed that:
A. The issuer has filed an application with the Pennsylvania Securities
Commission (the "Commission") to register certain of its Equity
Securities for sale to public investors who are residents of
Pennsylvania ("Registration");
B. The Security Holder is the owner of shares of common stock or similar
securities and/or possess convertible securities, warrants, options or
rights which may be converted into, or exercised to purchase shares of
common stock or similar securities of Issuer.
C. As a condition to Registration, the Issuer and Security Holder
("Signatories") agree to be bound by the terms of this Agreement.
II. THEREFORE, the Security Holder agrees not to sell, pledge, hypothecate,
assign, grant any option for the sale of, or otherwise transfer or dispose
of, whether or not for consideration, directly or indirectly, the EQUITY
SECURITIES as defined in the North American Securities Administrators
Association ("NASAA") Statement of Policy on Corporate Securities
Definitions set forth below and all certificates representing stock
dividends, stock splits, recapitalizations, and the like, that are granted
to, or received by, the Security Holder while the EQUITY SECURITIES are
subject to this Agreement ("Restricted Securities").
a. Year one:
Restricted Securities - all shares owned by the Security Holder
b. Year two:
Restricted Securities - __________ shares of Common Stock
Beginning one year from the completion date of the Issuer's public offering
pursuant to the Registration, two and one-half percent (2 1/2%) of the
Restricted Securities may be released each quarter pro rata among the
Security Holders. All remaining Restricted Securities shall be released from
escrow on the anniversary of the second year from the completion date of the
public offering.
III. THEREFORE, the Signatories agree and will cause the following:
A. In the event of a dissolution, liquidation, merger, consolidation,
reorganization, sale or exchange of the Issuer's assets or securities
(including by way of tender offer), or any other transaction or
proceeding with a person who is not a Promoter, which results in the
distribution of the Issuer's assets or securities ("Distribution"),
while this Agreement remains in effect that:
1. All holders of the Issuer's EQUITY SECURITIES will initially share
on a pro rata, per share basis in the Distribution, in proportion to
the amount of cash or other consideration that they paid per share
for their EQUITY SECURITIES (provided that the Administrator has
accepted the value of the other consideration), until the
shareholders who purchased the Issuer's EQUITY SECURITIES pursuant
to the public offering ("Public Shareholders") have received, or
have had irrevocably set aside for them, an amount that is equal to
one hundred percent (100%) of the public offering's price per share
times the number of shares of EQUITY SECURITIES that they purchased
pursuant to the public offering and which they still hold at the
time of the Distribution, adjusted for stock splits, stock dividends
recapitalizations and the like; and
2. All holders of the Issuer's EQUITY SECURITIES shall thereafter
participate on an equal, per share basis times the number of shares
of EQUITY SECURITIES they hold at the time of the Distribution,
adjusted for stock splits, stock dividends, recapitalizations and
the like.
3. The Distribution may proceed on lesser terms and conditions than
the terms and conditions stated in paragraphs 1 and 2 above if a
majority of the EQUITY SECURITIES that are not held by Security
Holders, officers, directors, or Promoters of the Issuer, or their
associates or affiliates vote, or consent by consent procedure, to
approve the lesser terms and conditions.
B. In the event of a dissolution, liquidation, merger, consolidation,
reorganization, sale or exchange of the Issuer's assets or securities
(including by way of tender offer), or any other transaction or
proceeding with a person who is a Promoter, which results in a
Distribution while this Agreement remains in effect, the Restricted
Securities shall remain subject to the terms of this Agreement.
C. Restricted Securities may be transferred by will, the laws of descent
and distribution, the operation of law, or by order of any court of
competent jurisdiction and proper venue.
D. Restricted Securities of a deceased Security Holder may be hypothecated
to pay the expenses of the deceased Security Holder's estate. The
hypothecated Restricted Securities shall remain subject to the terms of
this Agreement. Restricted Securities may not be pledged to secure any
other debt.
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E. Restricted Securities may be transferred by gift to the Security
Holder's family members, provided that the Restricted Securities shall
remain subject to the terms of this Agreement.
F. With the exception of paragraph A.3 above, the Restricted Securities
shall have the same voting rights as similar EQUITY SECURITIES not
subject to the Agreement.
G. A notice shall be placed on the face of each stock certificate of the
Restricted Securities covered by the terms of the Agreement stating that
the transfer of the stock evidenced by the certificate is restricted in
accordance with the conditions set forth on the reverse side of the
certificate; and
H. A typed legend shall be placed on the reverse side of each stock
certificate of the Restricted Securities representing stock covered by
the Agreement which states that the sale or transfer of the shares
evidenced by the certificate is subject to certain restrictions until
the second anniversary of the completion of the public offering pursuant
to an agreement between the Security Holder (whether beneficial or of
record) and the Issuer, which agreement is on file with the Issuer and
the stock transfer agent from which a copy is available upon request and
without charge.
I. The terms of this Agreement shall begin on the date that the
Registration is declared effective by the Commission ("Effective Date")
and shall terminate:
1. On the anniversary of the second year from the completion date of
the public offering; or
2. On the date the Registration has been terminated if no securities
were sold pursuant thereto; or
3. If the Registration has been terminated, the date that checks
representing all of the gross proceeds that were derived therefrom
and addressed to the public investors have been placed in the U.S.
Postal Service with first class postage affixed; or
4. On the date the securities subject to this Agreement become "Covered
Securities," as defined under the National Securities Markets
Improvement Act of 1996.
J. This Agreement to be modified only with the written approval of the
Commission.
IV. THEREFORE, the Issuer will cause the following:
A. A manually signed copy of the Agreement signed by the Signatories to be
filed with the Commission prior the Effective Date;
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B. Copies of the Agreement and a statement of the per share initial public
offering price to be provided to the Issuer's stock transfer agent;
C. Appropriate stock transfer orders to be placed with the Issuer's stock
transfer agent against the sale or transfer of the shares covered by the
Agreement prior to its expiration, except as may otherwise be provided
in this Agreement;
D. The above stock restriction legends to be placed on the periodic
statement sent to the registered owner if the securities subject to this
Agreement are uncertificated securities.
Pursuant to the requirements of this Agreement, the Signatories have entered
into this Agreement, which may be written in multiple counterparts and each of
which shall be considered an original. The Signatories have signed the Agreement
in the capacities, and on the dates, indicated.
V. The Security Holder understands and agrees that this agreement runs
concurrently with, and does not replace, the Security Holder's agreement
with First Montauk Securities Corp. (the "Underwriter") pursuant to which
the Security Holder has agreed to not sell any shares of Common Stock owned
by the Security Holder for one year from the effective date of the
Registration without the consent of the Underwriter, and further understands
that the Underwriter has represented to and agreed with the Commission that
it will not release any of the shares owned by the Security Holder for sale
during the one year period contemplated thereby.
IN WITNESS WHEREOF, the Signatories have executed this Agreement.
(ISSUER'S NAME)
By
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President
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Signature
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Printed Name of Security Holder
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Title, if Applicable
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